The Impact of the Deficit Reduction Act on Medi-Cal

The Deficit Reduction Act was signed into law by President Bush, in 2006, for the purpose of generating net reductions of $4.8 billion through 2010, and an additional $26.1 billion through year 2020 from Medi-Cal. As Medi-Cal provides health care coverage and long-term care assistance to more than 39 million members of low-income families and 12 million elderly and disabled individuals, the impact of the Deficit Reduction Act on Medi-Cal is unavoidable.

The purpose of the Deficit Reduction Act of 2005

The purpose of the Deficit Reduction Act of 2005 is to address the budget of the federal budget, by planning deficit reductions ranging from education to housing and Medicare to Medi-Cal. The Act made numerous changes to Medi-Cal law, including the well-known Medi-Cal Transfer of Asset rules which provide for the five-year look-back period. The Act also established the waiting, or penalty, period for individuals in institutional care, who would otherwise be able to receive Medi-Cal.

The Medi-Cal Transfer of Asset Rules

The start of the Penalty Period for transferred assets was changed from the date of transfer to the date when the individual transferring the assets enters a nursing home and would otherwise be eligible for Medi-Cal coverage. Therefore the penalty period does not begin until the nursing home resident is unable to pay the nursing home. The provisions of this law make it difficult for the middle-class to qualify for certain Medi-Cal programs.

Benefits are already provided through Medi-Cal

Medi-Cal generally provides health benefits that are either mandatory or optional. States are permitted to determine the amount of benefits, the duration and scope of those benefits. However, the benefits must be reasonable and medically necessary. They must also be consistent among different “categorically needy” groups of people, as well as, non-discriminatory with regards to the types of conditions covered, and the statewide availability.

The effects of Deficit Reduction Act policy changes

One of the major effects of the Deficit Reduction Act is the shift in costs to beneficiaries, which ultimately limits health care coverage and reduces access to services for low income beneficiaries. The Deficit Reduction Act provides flexibility for each state to modify their Medi-Cal programs. While some of those modifications may have a negative effect, some of the provisions will actually give states the power to expand eligibility, which will in turn expand access to services.

Proof of citizenship is now required

Prior to Deficit Reduction Act, U.S. citizens were not required to provide written proof of citizenship upon applying for Medi-Cal, or submitting to an eligibility review. Instead, oral affirmation of citizenship status was satisfactory. The Deficit Reduction Act changed the documentation requirements for U.S. citizens. Now, eligible individuals must provide primary documents, such as a U.S. passport or certificate of naturalization or citizenship); or documents of citizenship (e.g., a birth record, census record, or written affidavit), along with some form of identification, such as a driver’s license.

If you have questions regarding the Deficit Reduction Act, or any other Medi-Cal planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.

A graduate of Boston University School of Law, Scott P. Schomer is a frequent lecturer on estate planning and elder law issues, having discussed these important issues on local and national television. A seasoned courtroom advocate, Scott has obtained combined judgments and verdicts in excess of twenty-five million dollars for his clients. Scott has served as a member of the Los Angeles Superior Court Probate Volunteer Panel (PVP Attorney), Probate Settlement Panel and a Judge Pro Tempore. Scott's expertise has been recognized by his peers with such accolades as a life-time membership in the Multi-Million Dollar Advocates Forum, the Five Star Wealth Manager designation, and repeated nominations as California Super Lawyer.

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